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Why high quality foreign machinery is often cheaper than low quality domestic

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Sales fall on the market of construction machinery and the quality of domestic equipment is being analyzed by Director General of CNIIEP (Central Research Institute of Engineering Design) DScTech Stanislav Nickolaev

Sales failure situation has been observed on the market of construction machinery lately. Especially it concerns domestic equipment. Is it only the crisis to blame? This is the topic of our talk with CNIIEP Director General, Emeritus Builder of Ruusia, DScTech Stanislav Nickolaev.

Buying domestic machinery be ready to bad service
— Mr. Nickolaev, first of all I’d like to understand why our equipment gives way to foreign one?
— You know, domestic construction machinery has its achievements, but there is one but significant drawback. There is a notion “operating costs” that is the money for maintenance, replacing of some details during the operational term. Domestic machinery has much higher exploitation expenditures than foreign.
The service of domestic machinery is poorly organized. If something got broken, for example crane hoisting system, you won’t get it on time. And the construction has stopped for the time of repair. I think, it is one of the reasons for customers choosing foreign samples.

— But it does not seem to be the only reason for the sharp sales failure of domestic construction machinery…
— It is not. You see, our construction complex is accustomed to superprofits. Nobody wants to work with 10—15% gains, though it is quite normal for foreign construction companies. We want all 100% and even 200%. And such approach is adopted by marketing services of machine-building plants.
Making a business-plan on production of some kinds of construction machines, a bigger than reasonable interest margin is included. And all over the world a 10—15% income is considered a very efficient investment and a 5—7 years’ pay-back term is a good result. But our producers are guided by the principle: ”I want it today, I want it now”.
The result is that domestic machinery is a little cheaper on the market than imported one, but the quality is significantly lower. Besides, there are cases when the price of imported machinery is even lower than that of domestic analogs. What bulldozer, loader, extractor will a customer buy? Of course, the one with the optimal correlation of price and quality. I’m sure, our producer should hold a more forward-looking policy.

We eliminated SNiPs (Construction Norms & Regulations) and GOSTs (federal standards) checked with time
— In one of your interviews you said: “We’ll never solve the problem if we constantly repeat the way having led to it”. At what stage did we lag behind? What was our mistake?
— With the collapse of the Soviet Union our construction science was practically destroyed. You see, any problem is solved in complex. The triple integrity of “technology – engineering design - operation” was destroyed.
As far as technologies are concerned, there were scientific-research institutes and design-engineering departments dealing with developments of construction machinery and equipment. In the 1990ies it was all ruined.
As to the norms and regulations, they were also reconsidered. And I am not sure that the new are better than the old ones – SniPs and GOSTs - checked with time. Any machinery bases on general technological achievements. Foreign samples are well ahead in the sphere of hydraulics, pneumatics, electronics, telematics, energy efficiency and ecological friendliness. And we are seriously lagging behind.
Besides, Russian machinery production practice bases on the obsolete socialist principle: ”Every screw produced by ourselves”. And all over the world there exists distinct specialization of labor, and the experience shows that it is much more productive, and the quality of the final product is higher.
Step by step things are getting off the dime, within MSUCE Federal innovation construction scientific and research center is being created. It gives us hope.

— As far as I know some research work was carried out at plants…
— Unfortunately, most of research centers and technical departments at plants have been demolished and do not exist anymore. A very worrying fact is that we have stopped being interested in technical novelties. Make a quiz: who is subscribed to technical journals at the plants? Very few. Thus we are losing.

— And where is the way out? Can we see the trail end of a leaving train?
— I think, we can do a lot. Many talented creative people work in the industry. But we need a definite strategy. We need stimuli to get people develop innovation samples. For example, 3-4 tax-free years for those who develop new technological decisions.
Unfortunately, we hardly can keep up with world leaders of construction machinery production, but our cargo-carrying vehicles (KamAZ, for example) are in great demand, take part in the rallies showing good results…
We used to have good crane building industry and there is still basis for it.
So, perhaps, industries where we feel confident should be singled out and effort should be directed into definite niches of the market?

— What do you think is the reason of Chinese construction machinery success? Why do they conquer the market so fast?
— The Chinese behave very wisely. They do not buy foreign products, nor even a technology, but a “know how”, a license for production of advanced machinery. That’s why they keep pace with novelties appearing on the market. Their machinery may be a bit worse than the one of famous brands but it corresponds to modern requirements.
And if we adopt something we domesticate assembly at best, as it happened with some kinds of motor cars.


Elena Matseiko

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